18 September 2018, Sweetcrude, Lagos — BP Plc has bought 7.6 million barrels of Nigerian crude in a swap deal from Vitol Group over the last two months, according to data sourced from Bloomberg.
According to the data, the 7.6 million barrels doubles the entire activity of the past seven years.
The crude grades bought and sold were Qua Iboe, Bonny Light, Forcados and Bonga: the four derivatives are among the largest export grades from Nigeria.
Although the data failed to state at what price each barrel was sold, it did say the deal held on a pricing window run by S&P Global Platts.
Checks by SweetcrudeReports on OPEC’s Monthly Oil Market Report, MOMR, for September, showed that Bonny Light sold for $75.06 per barrel in July, dropping to $73.29 per barrel in August.
Nigeria’s Bonny Light pricing was the second-highest among OPEC’s 15-reference basket, with the United Arab Emirates, UAE’s Murban, sold for $76 per barrel in July and $74.91 in August.
However, OPEC’s catalogued pricing might not count as the derivatives allow a buyer to exchange a fixed price for a floating one (below the official price) published by Platts. That means the bidder might profit if Platts’ assessment says the West African market has strengthened.
The transaction comes at a time when West African grades, Nigeria’s inclusive, are said to be doing badly at the international market due to shale boom, and traders are scrambling to get hold of the tiniest sale.
Most Nigerian crudes are light and low in sulfur. Sales, therefore, have been affected by booming output of U.S. shale with similar properties. And not only has the U.S. cut imports from Nigeria, some major buyers, such as Taiwan’s CPC Corp., have also developed a high taste for shale.
However, the deal is said to have also attracted the interest of other oil majors and trading houses, with contracts worth 5 to 8 million barrels being swapped since trading began two months ago.
As many as eight companies bought and sold the four Nigerian grades, traders said. In the absence of unrest in the Niger Delta, shipments of the four grades normally flow at a rate of about 700,000 to 1 million barrels a day, according to loading programmes sourced from Bloomberg.
Date Seller Buyer Grades Volume Prices vs Dated Loading
Sept. 6 Vitol BP Qua Iboe 950k bbl +$1.70 Oct. 1-10
Sept. 6 Vitol BP Bonny 950k bbl +$1.70 Oct. 12-16
Sept. 7 Vitol BP Bonga 950k bbl +$1.75 Oct. 28-29
Sept. 7 Vitol BP Qua Iboe 950k bbl +$1.63 Oct. 12-13
Sept. 10 Vitol BP Qua Iboe 950k bbl +$1.65 Oct. 17-18
Sept. 11 Vitol BP Qua Iboe 950k bbl +$1.75 Oct. 29-Nov. 5
Sept. 11 Vitol BP Bonny 950k bbl +$1.55 Oct. 16-17
Sept. 13 Vitol BP Forcados 950k bbl +$1.53 Oct. 11-12
Sources: Traders monitoring Platts window
Over the past six market trading, BP bought eight cargoes, including four Qua Iboe cargoes for loading from mid-October to early-November. There will be a total of nine shipments of Qua Iboe in October.
About 25 out of 60 Nigerian cargoes scheduled for October export remain unsold, but, the unsold cargoes will be moved to November shipments next week.
BP Plc, also a big-time refiner of crude, would either resell the Nigerian crude grades or process them in its own plants.
However, a survey of 5 crude traders involved in the market by Bloomberg, showed while swapping of crude could increase liquidity, it would not help find new buyers for Nigerian crudes.